Caixabank Considers Making Offer for Barclays in Spain — CEO

Jeannette Neumann had an exclusive interview with Spain’s Caixabank chief executive on June 11 during which he detailed two planned acquisitions for the bank. CEO Juan Maria Nin said Caixabank was considering making an offer to purchase Barclays PLC’s retail business in Spain which has an estimated value of about EUR2.2 billion ($2.98 billion). Mr. Nin also expressed interest in purchasing Catalunya Banc SA in Catalonia.

The story as it appeared on Dow Jones:
June 12, 2014, 7:58 AM EDT: Caixabank Considers Making Offer for Barclays in Spain–CEO

MADRID–The chief executive of Caixabank SA said the Spanish lender is considering making an offer for Barclays PLC’s retail business in Spain, which analysts estimate has a value of as much as EUR2.2 billion ($2.98 billion).

“We have a lot of interest,” Juan Maria Nin said in an interview.

He said his Barcelona-based bank, Spain’s third largest by market value, is in talks with the U.K. lender but has yet to begin an analysis of mortgages and other loans held by Barclays’ 262 offices in Spain.

Acquisition of those offices, he said, would help bolster Caixabank’s market share, particularly in Madrid.

Barclays once had about 600 offices in Spain and was one of the country’s leading foreign banks, but the collapse of Spain’s real-estate market in 2008 brought losses on mortgages and other types of real-estate loans, chipping away at the lender’s market share and profits. The bank announced in May it would abandon the retail-banking businesses in Western Europe in an effort to boost profitability.

A spokesman for Barclays in Spain declined to comment.

In the interview Wednesday, Mr. Nin said Caixabank is also considering a purchase of Catalunya Banc SA, a competitor in its home region, Catalonia. Cataluyna Banc’s strong presence in and around Barcelona is attractive, he said. The government nationalized Catalunya Banc in 2012, and previous attempts to sell it have failed to attract viable offers. Catalunya Banc went up for auction again June 2, and interested buyers have until July 14 to submit binding offers.

Spain injected EUR12 billion ($16.2 billion) into Catalunya Banc, the country’s second most expensive bank bailout after Bankia SA. The lender’s bank-branches carry the name CatalunyaCaixa.

Mr. Nin said Caixabank had not begun due-diligence research on the bailed-out lender.

“I am going to look at both,” he said, referring to Barclays and Catalunya Banc.

Mr. Nin is a tried-and-tested deal maker. In the fallout of the real-estate bust, Caixabank bought six Spanish savings banks, known as cajas, and two banks, Banco de Valencia and Banca Civica.

Those acquisitions catapulted Caixabank’s share of Spanish deposits and loans to 15% from 10%, according to Mr. Nin, overtaking Spanish rivals Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, known as BBVA. Part of that growth came as Barclays and other foreign banks retreated.

“We are the toughest and quickest integrator, at least in Europe,” Mr. Nin said, comparing Caixabank’s growth through acquisitions to that of U.S. lender Wells Fargo & Co.

He hinted at further buying opportunities in the wake of balance-sheet checkups by European regulators this year that will analyze the strength of the euro zone’s biggest banks. The result of these stress tests and asset-quality reviews, he said, will “produce new opportunities for consolidation.”

Caixabank’s extensive branch network has some analysts and investors scratching their heads. With 5,700 branches throughout Spain, Caixabank already has more than any other lender. Its branches carry the name La Caixa. Banco Santander has 4,000 offices, BBVA 3,200.

But Caixabank has the least productive branch network of major banks in Spain as measured by revenue per branch, according to an April 16 report by Citigroup analyst Stefan Nedialkov. Caixabank has a 16.9% branch market share in Spain, Mr. Nedialkov wrote, compared with a 14.7% loan share. To make its branches more efficient, he added, the lender would need to close around 700 branches.

Mr. Nin defended the branch network.

“The retail banking business of the future demands strong market share,” he said.

But he acknowledged that Caixabank’s heightened focus on digital banking and younger Spaniards’ growing reliance on mobile banking could shift its bricks-and-mortar strategy.

“We are always going to have the biggest branch network in Spain because in retail banking today in Spain it’s an important competitive advantage, ” he said. “But that doesn’t mean that we wouldn’t adjust our branch model or the number of branches. If in the future our clients demand another type of branches or if our clients demand another channel and they don’t appreciate physical branches, we will make decisions.”

In November, Caixabank launched a new type of branch, called Office A, that is meant to have the “look and feel” of an Apple Inc. store, Mr. Nin said.

The Barcelona branch has a lounge for customers and a display case of different designs available for credit cards. Clients can sign most documents electronically on tablets in or outside the branch. Caixabank is launching a similar office in Seville, in southern Spain, in coming weeks.

Catalonia’s regional government leaders in Barcelona have proposed a referendum on independence from Spain, raising questions about the impact on the lender.

“Our contingency plan is that we don’t have a contingency plan,” Mr. Nin said, adding that he is confident Spanish politicians will reach an agreement that will be “good for Catalonia and all of Spain.”

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